All investment decisions of the Company are approved by the Investment Committee. The Investment Committee reports to the Board of Directors. Investments above a specific threshold must also be approved by the Board.

The Investment Committee is focussing its activities on several key well defined investment sectors which it believes offer the opportunity to collectively generate overall returns for shareholders materially in excess of the benchmark ASX All Ordinaries Index (XAO). These sectors are:
• Strategic investments in listed companies with either an active or passive participation;
• Corporate financing;
• Promotion of IPO’s; and
• Participation in, and funding of, corporate restructurings.

The nature of the above investment activities is such that the successful identification and execution of any one such investment may take considerable time and effort. Therefore it is anticipated that only a relatively small number of such investments may be made in any one year. However, the collective return on investment from such investments, if correctly executed, is anticipated to have a significant positive impact on the overall performance of the Company.

Bentley continues to have the majority of the Company’s funds held under management by Sydney based fund manager, CBG Asset Management Limited (Formerly FSP Equities Management), in the CBG Fund (Formerly FSP Fund). The objective of the fund is to outperform the S&P/ASX 200 Accumulation Index over the medium term. The investment manager is “style neutral” and invests in growth stocks, value stocks, stocks with maintainable dividend yields and special situations.

Bentley intends progressively reducing its investment in the CBG Fund, as funds are deployed into various direct and strategic investments under its stated Investment Strategy. Bentley will however maintain an exposure to the market whilst funds are not fully deployed under such strategy by retaining funds in the CBG Fund.

Performance Bonus Scheme:

In order to align the interests of the Investment Committee and shareholders of the Company and to provide an appropriate incentive for the achievement of superior-to-market investment returns, the Company has implemented a Performance Bonus Scheme (the Scheme) for members of the Investment Committee.

The key elements of the Scheme are summarised as follows:
• The performance of the Company will be measured each financial half year by comparing the change over the half year in the net asset value of the Company (with internally managed assets valued at the lower of cost or value) with the change in the net assets of the Company that would have resulted if the investment return was equal to that recorded by a Benchmark Index - the ASX All Ordinaries Index (ASX code: XAO).
• 20% of any outperformance in excess of $250,000 relative to the Benchmark Index is available for distribution to the Investment Committee each half year.
• Any underperformance in a half year will be carried over to the next two half years, such that underperformance in a half year must be ‘clawed back’ by outperformance before a performance bonus can be paid in the following two half years.
• The terms of the Scheme are to be reviewed annually by the Board.

The Company believes the principles adopted by the Scheme are consistent with or exceed industry best practice, in that:
• A performance bonus on internally managed assets is paid only on realised (and not unrealised) gains. i.e. investments have to be sold (or otherwise crystallised) to contribute to a performance bonus. This eliminates the potential of a performance bonus being paid in a half year by reference to unrealised internally managed investments that may have substantially outperformed over that half year, yet may underperform subsequently.
• The ‘clawback’ of underperformance means that the Investment Committee will be highly motivated to avoid half years of underperformance.
• To achieve a performance bonus, the Investment Committee must not only outperform the Benchmark Index, but additionally achieve an absolute return in excess of $250,000 of the Benchmark Index for any half year. In other words, the first $250,000 of outperformance in any half year does not generate a performance bonus.

With the appointment of the Investment Team and the refinement of the Investment Strategy of the Company, the Company looks forward to the next phase in its evolution.